China is heading for a potential showdown with the US over the value of its currency, the yuan, which could have significant implications for global stocks and markets. The yuan has been flirting with record lows offshore, while bond yields have also hit an all-time low.
For investors in China, the risk of another trade war with the US is increasing. While China has reduced its reliance on US exports, confidence in its economy and financial assets has plummeted. If sentiment worsens further, there’s a risk of massive outflows from Chinese assets.
Despite the uncertainty, there are still investment opportunities available in China, particularly in sectors such as electric vehicles (EVs) and solar energy.
Source: https://www.bloomberg.com/news/articles/2025-01-16/china-heads-for-trump-showdown-with-yuan-stocks-under-threat